Here we go, a lot of charts to go over. First…
Smalls Caps – IWM
BOOM. 20% in five weeks. This has broken out (clearly) after going sideways since 2014 (Sideways Bear Market). Someone, anyone, please tell me this is bearish. As you know, I flipped intermediate term bearish, which means I am expecting a drawdown back to under 130 in the IWM.
The best thing about this and why it is a new bull market is there are so many people under invested and out of the market right now — people hoping for a pullback and not getting one. This chart is awesome. Straight velocity that gave no one a chance to buy. I mean, the 200 day is under 120 and IWM is at 138. Crazy. Fortunately, I bought before the election because, either way, I thought we went up. Not this fast, though.
S&P 500 – SPY
Same shit different ticker. If you were bearish and playing the last 5 weeks you are likely out of the market now.
Technology – QQQ
This is different, and where the money will and should begin to start rotating back to. If you remember, the QQQ’s were making new highs and the other indexes were not. This would worry me if it wasn’t for IWM (see above). The market is betting on America right now with the Small Cap Growth Stocks.
Bonds – TLT
Gross. Absolutely Gross. Unless this is the largest V shape rally in history I see nothing but sellers waiting, especially when old retired America gets there statements at the first of the year and they see stocks up double digits and bonds down —wait for it — DOUBLE DIGITS. I am, and have been, expecting a bounce to 125-127. I still think it happens, but I am not a buyer up there. I said if bonds do not hold 119 they may crash and I am very skeptical of this 119 hold right now. Which leads me to…
GOLD – GLD
I have never seen gold this oversold on the daily and having zero bounce. For as constructive as this has been for the first half of 2016, this has basically given everything back. That’s not bullish. I have not given up on this yet, but I am pretty damn close. I thought that 112 would hold, it didn’t. 110 better hold. I, unfortunately, have a belief that a lot of people have been holding out and not selling, which is not good because capitulation may not have happened yet.
Silver – SLV
I put this on here because this is the ONLY reason I think gold is way overdone. Silver leads and right now it is bouncing higher before everything else.
Emerging Markets – EEM
This is why I believe there are a lot of things out of whack and emerging markets may be the ONLY thing correct. It has successfully broken out to the prior breakdown, retested the 200 day MA, and held. This is important for now and really the LAST reason I can be bearish on the dollar, bullish gold and bullish bonds.
$$$$ – The Dollar
I believe the dollar going through the roof kills the earnings of many of the companies in the big indices. That is why the Fed is not going to let this happen. The rate hike is priced in, hell the second rate hike is priced in now. The Fed is going to raise rates 110%, so I am looking for this rate hike to be priced in and the dollar sell off. And god help the market if the Fed holds.
This is out of control. Where does it stop? No one knows, but I bet it is soon. This is the reason for the market rip-your-face-off-rally continuing. This is the reason that gold is on the lows. The BOJ and central banks continue to prop it up. People are going to get burned, in my opinion.
If I am right about the above, this is about to be one of the biggest failed breakdowns of all time and a 20% rally to 1.25. Everyone — and I mean EVERYONE — believes the euro and dollar are going to parity. I don’t think so.